The Art of Understanding
Australia is buffeted by local and global forces that are often confronting and difficult for small to medium enterprise to grapple with. Ambiguity adds stresses particularly where business is so focused on day-to-day that competitors and foreseeable events are not on the horizon.
Costly mistakes, particularly involving regulations and laws such as Consumer and Competition, misleading advertising, failure to honour warranties, not holding the correct permits and licences and more are avoidable.
Everyone has access to hordes of information but there is an art form in filtering, processing, analysing and understanding. This is a forte of nem Australasia, as are the other basic rules below.
In the meantime, you can apply some basic rules to help you decide how to become strategic and forward thinking whilst running the day to day business.
Keep the costs down
Successful, and high-performing businesses continually strive to keep their production costs down as low as possible (consider using Lean and other methodologies in nem’s arsenal) and their prices competitive.
When confronted with a sagging economy, do not sacrifice quality; even though this may require slightly higher prices. Your objective is to deliver goods and services while avoiding price wars (consider using nem’s cama).
Differentiate Your Business
This is often quite confronting and complex and nem’s cama programme addresses this directly and simply. You know some answers and we can assist you to find what we don't know about your business and the market.
Everyone speaks of innovation strategies designed to regularly introduce new products, services and processes. Unless you're just a seller and not a manufacturer you must consider percentage of annual revenue to new product development initiatives. Successful growth companies show a consistent affinity for using aggressive strategies instead of conservative risk averse tactics.
Differentiation through marketing is often tempered by a fallacy that the investment is not worth the limited short-term spike in sales. Instead many businesses rely almost entirely on their sales team or the Internet to keep their existing customer base up to date about new products or services.
This strategy has severe limitations.
Proactive business work closely with their suppliers and customers, to identify and produce specific customised and tailored offerings of product and service even to the point of altering their product lines to meet customers’ existing and changing demands.
Even if you're producing, or simply selling everyday standard items you can still invite customers to make small alterations or take advantage of complementary services.
Despite the conventional wisdom that smaller firms can improve their performance by zeroing in a specific market segment it's best you target a whole market taking advantage of volatility to increase market share.
It's better that you don't focus on a niche sector because you'll limit your potential. This is often a limitation if you own a territory franchise. Population growth is often the only mechanism if you're unable to innovate your offering. You must target the competition: understand what they were good at and what they may be bad at, and be better than them by using nem’s cama.
A central tenet behind cama is that being 'as good' as competition offers no competitive advantage outside of price competition, which is not sustainable long-term.
The Dream of Going International
Entering foreign markets is fraught with many risks and one of the major ones is cultural, particularly if you decide to enter Asia. Its a not a strategy you should use to try and overcome your troubles in your domestic market. To go international, you must have a very differentiated offering; a product or a service of such perceived value that it's attractive in its own right.
Most of the small firms that exhibit high growth, focus on the Australian and New Zealand markets.
Strategic decisions are driven by the relative size of your business and the nature of the industry you are in. Small to medium businesses that achieve high growth despite Australia’s distressed economy always pursue multiple tactics; never becoming static and pigeon holed. The most common combination among the firms studied was an attempt to differentiate themselves from their competitors through innovation plus some type of product or service customisation plan.
The attitudes, and demonstrable leadership of Australian and New Zealand small to medium business owners and their employees facing economic turmoil can mitigate the negative effects.
Author: Kevin Beck, Associate of nem Australasia